Disability pension from 1. September 2025

The new disability pension from September 1, 2025 is for those who are assessed with 0 - 25% ability to work on the labor market according to an integrated expert assessment. The new disability pension is permanent. The calculation of disability pension payments will be simplified. The new disability pension will be income-related and will replace the payment categories; disability pension, income insurance and a special pension supplement for maintenance. Amounts and free income limits can be seen here.

Partial disability pension - activity grant

The new partial disability pension from September 1, 2025 is for those who are assessed with 26 - 50% ability to function in the labor market according to an integrated expert assessment. Partial disability pension is permanent. The partial disability pension is intended to provide financial support to individuals with the ability to function in the labor market and to be an incentive for employment with a free income limit due to employment income.

Partial disability pension and activity allowance

The Labor Agency is authorized to pay an activity allowance to those who are entitled to a partial disability pension and are actively looking for work with the support of the agency. Applications go through The Labor Agency.

Medical and rehabilitation payments

Medical and rehabilitation payments will replace the rehabilitation pension on 1. September 2025.

For who

Medical and rehabilitation payments are intended for those who have a chronic or serious health problem, or a disability that is considered to have a permanent effect on the ability to function in the labor market and if the person:

• is undergoing approved treatment or rehabilitation.

• waiting for treatment or rehabilitation to begin.

• cannot attend rehabilitation due to ill health.

• is looking for a job after rehabilitation.

• have fully used the sick leave from the employer and payments from the union health fund.

• has had a legal residence in Iceland for a continuous 12 months before the start of receiving medical and rehabilitation payments.

Payment period

It will be possible to pay medical and rehabilitation benefits:

• for up to 60 months. It will be possible to extend payments by 24 months in the case of persons in a vulnerable situation with a multifaceted problem who need more rehabilitation.

• while a person waits for treatment or for rehabilitation to begin for up to six months. The same applies if the person's ill health prevents treatment or rehabilitation from starting.

• for 3 months after the end of rehabilitation if the person is registered as a job seeker at the Employment Agency.

Service providers have an obligation to cooperate on services related to the rehabilitation of individuals.

This applies in particular to persons who find themselves between the services of rehabilitation providers and persons with multiple problems.

The service providers are:

• Social Insurance Administration

• Municipal social services

• Directorate of Labour

• Healthcare institutions

• VIRK Vocational Rehabilitation Fund

An integrated expert assessment must be carried out to determine the right to a disability pension or a partial disability pension, and therefore replaces the current disability assessment.

• Rehabilitation or approved treatment whose aim is to promote increased skills for full or partial employment must be fully experienced before an integrated specialist assessment.

• The requirement for an integrated expert assessment can be waived if it is deemed unnecessary.

The integrated expert assessment evaluates the ability/skills of individuals to function in the labor market

• it is individual

• it is holistic

The integrated expert assessment is based on the concept of the ICF classification system, an international classification system for skills, disability and health.

• skills are the result of an interaction between the individual's health and circumstances.

A working group appointed by the Ministry of Social Affairs and Labor Market is responsible for the preparation of the integrated expert assessment. The Social Insurance Institution is responsible for carrying out the assessment.

Service providers have established a coordination team to promote continuity in services and allowances for individuals who require rehabilitation services from more than one provider.

The service providers are:

• Social Insurance Administration

• Municipal social services

• Directorate of Labour

• Healthcare institutions

• VIRK Vocational Rehabilitation Fund

The coordination teams are regional. There are six coordination teams in the country: Reykjavík, the Capital Region surrounding Reykjavík, West Iceland and the Westfjords, North Iceland, East Iceland, and South Iceland and the Suðurnes peninsula.

Each team is composed of two specialists from each service provider and one alternate. Participation in the teams is part of the respective specialists' job duties.

Team leaders at the Social Insurance Administration manage the teams' meetings and all statistics.

Role of Coordination Teams

Ensure that individuals who need the services of more than one service provider or who need to go between service providers enjoy a holistic approach to rehabilitation by promoting the necessary overview of the service.

Ensure greater continuity in the rehabilitation and livelihood of people who need the services of more than one service provider, have to go between service providers or when the need for services is unclear.

Look specifically at waiting lists in resources and look for possible ways to reduce waiting lists in cooperation with service providers of the welfare system, highlight the need for the development of new resources and evaluate the success of existing ones.

The Social Insurance Administration operates a service portal, among other things, for the purpose of ensuring the necessary overview of the treatment that individuals receive.

The Social Insurance Administration must keep a register that states in an exhaustive manner what information about individuals is shared through the service portal.

Service providers are obliged to ensure access to the necessary data through the service portal, and representatives of coordination teams must have access to that information.

The Terms of Service for the Service Portal can be found here

International Classification of Functioning, Disability and Health (ICF or International Classification of Functioning, Disability and Health)

• The purpose of the system is to classify and describe a person's skills in interaction with the environment and conditions.

• According to the classification system's philosophy, skills are the result of the interaction of a person's health and circumstances.

• The integrated expert assessment that replaces the current disability assessment in the current system is based on the ICF concept.

• A working group appointed by the Ministry of Social Affairs and Labor Market is responsible for the preparation of the integrated expert assessment that will be used in Iceland. The Insurance Institute is responsible for its implementation and implementation after September 1, 2025.

• Before the entry into force of the law, The Social Insurance Administration will educate and inform relevant parties in more detail about integrated expert assessment and its use.

You can find more information about the ICF from the National Medical Examiner here

TR's Course for Professionals on the New System

TR offers specialized courses for professionals on the new disability and rehabilitation system that will take effect on September 1, 2025. This is a two-day course where the first day covers rehabilitation in the new system, and the second day focuses on disability, ICF, and integrated expert assessment, along with a representative from the Directorate of Labour presenting on activity support.

The course is available on the following dates:

Thursday, September 11 and Friday, September 12 - FULLY BOOKED

Monday, September 15 and Tuesday, September 16 - FULLY BOOKED

Wednesday, October 8 and Thursday, October 9 - FULLY BOOKED

Monday, October 27 and Tuesday, October 28 - FULLY BOOKED

Monday, November 17th and Tuesday, November 18th - FULLY BOOKED

Registration for the courses is necessary.

Classes begin at 09:00 and end at 14:30 on both days.

The course will be held at TR in Hlíðasmári 11, Kópavogur.

Recordings from course - only in Icelandic:

Please note that you can select Icelandic subtitles for the videos by selecting the CC box next to the gear icon.

Medical and rehabilitation allowance

Disability

Activity grant